Finding Text
Finding 2023-002 Reporting
Identification of the federal program:
Federal Grantor: United States Department of Health and Human Services (HHS), Health Resources and Services Administration (HRSA)
Assistance Listing No.: 93.498, COVID-19 Provider Relief Fund and American Rescue Plan (ARP) Rural Distribution (PRF)
Period of Availability: 01/01/2020–12/31/2022 (Period 4) and 01/01/2020–06/30/2023 (Period 5)
Criteria or Specific Requirement (Including Statutory, Regulatory, or Other Citation):
2 CFR Section 200.303 of the Uniform Guidance states the following regarding internal control:
“The non-Federal entity must: (a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework,” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).”
The terms and conditions of the award require the recipient to submit reports as the secretary of HHS determines are needed to ensure compliance with the conditions that are imposed on the payment, and such reports shall be in such form, with such content, as specified by the secretary of HHS in future program instructions directed to all recipients.
Condition:
For one of the sampled PRF reports (Mercy Hospital South Period 5 PRF Report), the amount reported for net patient service revenue (NPSR) for calendar year 2023 quarter 2 (CY2023 Q2) was incorrect for one reporting tax identification number (TIN).
Cause:
Management’s review of the NPSR for CY2023 Q2 in Mercy Hospital South’s Period 5 PRF Report was not sufficiently precise to detect the error.
Effect or potential effect:
NPSR was incorrectly reported for CY2023 Q2 for one reporting TIN.
Questioned costs:
None.
Context:
We tested seven of 38 Periods 4 and 5 PRF Reports submitted to HRSA. For one of the seven reports tested, we noted the NPSR amount reported was incorrect by $6,749,388. For CY2023 Q2, Mercy Hospital South Period 5 reported NPSR of $135,729,608 while the correct amount that should have been reported is $128,980,220. However, since the incorrectly reported NPSR amount did not result in any lost revenues reported for this quarter (lost revenues reported for CY2023 Q2 were $0), this error did not result in a questioned cost.
Total federal expenditures for Assistance Listing 93.498 totaled $104,538,125 for the year ended June 30, 2023, of which $94,383,394 were lost revenues.
Identification as a repeat finding, if applicable:
The finding is not a repeat finding from the prior year.
Recommendation:
Mercy Health should ensure internal controls over the review of PRF Reports are enhanced to include sufficient precision to allow for accurate reporting.
Views of Responsible Officials:
Management agrees to the finding and has developed a corrective action plan. One cost report adjustment for the current year was inaccurately labeled as a prior year adjustment. This was an isolated oversight by our revenue analysis team.